Economic globalization has created millions of jobs and produced more affordable goods for consumers. But some say that the global economy needs international labor standards. These would provide minimum standards for worker safety and pay. Others respond that individual nations must decide for themselves on labor standards.
Making a Global Economy
The International Labor Organization (ILO) was established in 1919 as part of the agreements that ended World War I. The ILO created a set of international labor standards. The standards included an "adequate wage," an eight-hour work day, the abolition of child labor, and the right of workers to join labor unions. The ILO standards were thought necessary to meet the challenge of Communism. (The Russian Communist Revolution had recently occurred.) But the standards were voluntary, and most nations, including the United States, ignored them.
In 1944, toward the end of World War II, U.S. and other allied economic leaders met to design the world's post-war economy. The American secretary of the treasury, Henry Morgenthau, and the other economic leaders believed that high unemployment and barriers to international trade had been contributing causes of the devastating war. The leaders agreed that to prevent future world wars, nations would have to cooperate in a globalized economy created by free trade. Each nation would also have to establish a "safety net" of worker protections to reduce unemployment and poverty.
To help achieve free trade and employment, Morgenthau and the others formed the International Monetary Fund (IMF) and the World Bank. These financial institutions lent money to countries for them to develop their economies and participate fully in international trade. The General Agreement on Tariffs and Trade, later renamed the World Trade Organization (WTO), set the rules for trade agreements among nations.
Representatives of financial institutions, corporations, and governments have always participated in IMF, World Bank, and WTO decision-making, but workers have been excluded. The old International Labor Organization established after World War I still exists, but it has no legal authority to enforce ILO labor standards. Meanwhile, treaties and the financial power of the IMF and the other international finance and trade institutions have made sure that free trade and private enterprise thrive under globalization.
Globalization and Labor
The opening of free trade and business investment in the world created tremendous economic growth for nearly three decades following World War II. Even the poorest countries benefited by putting their people to work in new export industries.
But those supporting international labor standards voice concern over recent trends. As competition among businesses has increased, a so-called "race to the bottom" seems to have begun. Many companies have moved to countries with the lowest wages and tax rates. This has increased employment in poor countries, but 1.3 billion workers today still earn less than $1 a day with little or no "safety net" to help them. In these countries, sweatshops, child labor, industrial pollution, and poor worker health and safety conditions are commonplace.
In Europe and most of the other industrialized areas of the world, high-paying export jobs created by free-trade agreements have helped many workers. But in many places unemployment has grown and economic growth has slowed. At the end of the 20th century, the United States experienced an eight-year economic boom. It saw the stock market soar, unemployment dwindle, and most people's incomes increase. Wages for unskilled workers, however, stalled, health and other benefits decreased, and union membership has fallen dramatically.
Those favoring international labor standards say some large U.S. employers have used the threat of moving outside the country to deter union organizing. Others disagree. They point out that the United States has changed from a manufacturing to a service economy. This, they say, has eroded the base of industrial unions.
In 1994, the North American Free Trade Agreement (NAFTA) went into effect. This agreement among the United States, Canada, and Mexico dropped trade barriers and furthered the goal of free trade. So far, NAFTA has probably been a net plus for the U.S. economy. For example, the South lost tens of thousands of textile and furniture manufacturing jobs to low-wage workers in Mexico. But most unemployed Southerners soon found work in new high-tech factories, making such things as fiber-optic cable and computer chips. Often, foreign investors built these factories to take advantage of the South's strategic location in the middle of the North American free-trade area.
American labor unions have strongly opposed NAFTA. Labor leaders argue that if NAFTA and other free-trade agreements can protect the rights of globalized businesses, why not protect the rights of workers in poor developing countries? Currently, fines and other penalties do exist for national child-labor and minimum-wage law violations. But it is up to each country to handle its own cases. Business leaders claim that labor unions are demanding burdensome labor regulations in free-trade agreements to protect the jobs of their members.
Those favoring international labor standards stress the need to eradicate sweatshops. Many companies in the global economy search for countries with the cheapest possible labor. They often arrange with local employers to hire factory workers to do low-wage work for long hours under appalling conditions. A young woman from Bangladesh described her work in a clothing factory:
I sewed on collars. I was paid [about $10] a month. I often worked overtime and was not paid. I worked from 7 a.m. till 10 p.m. or sometimes all night, for seven days a week. I had 30 minutes for lunch and we had to eat at our machines--we were not allowed to leave the factory.
Recent investigations by Business Week magazine and others confirm that sweatshop workers are frequently cheated on their wages, forced to work overtime, exposed to dangerous chemicals and machinery, locked inside during working hours, and even beaten for being tardy.
Yet, poor developing nations often defend sweatshops. They say that the low-cost factories provide needed income for families who are struggling to survive. In many of these countries, working for 60 cents an hour 12 hours a day is a step up from poverty. Moreover, is it really fair for the United States and other advanced countries to try to force their labor standards onto countries that are just beginning to industrialize? After all, sweatshop conditions were common in the United States 100 years ago during our own industrial revolution.
Nicholas D. Kristof and Sheryl WuDunn, reporters on Asia for the New York Times, argue that sweatshops, for all the pain they cause, also produce change. They contrast India, which "resisted foreign exploitation," with Taiwan and South Korea, which "accepted sweatshops as the price of development." Today, they say, "Taiwan and South Korea are modern countries with low rates of infant mortality and high levels of education; in contrast, every year 3.1 million Indian children die before the age of 5, mostly from diseases of poverty like diarrhea."
U.S. clothing manufacturers have received much publicity lately over sweatshops. One incident involved Saipan, part of the Northern Mariana Islands in the South Pacific. This group of islands has U.S. commonwealth status similar to Puerto Rico. Many big-name American clothing companies contracted with Saipan employers to hire workers from several Asian countries to manufacture garments that could legally be labeled "Made in U.S.A."
In 1999, class action lawsuits were filed on behalf of up to 50,000 Saipan sweatshop workers. According to the plaintiffs, workers were charged up to $10,000 apiece to work in a Saipan factory. They were then forced to work overtime without pay until their "recruitment fee" was paid off. This amounted to indentured servitude, which has been illegal in the United States since the Civil War. The workers were also allegedly forced to sign contracts, promising not to date, get pregnant, or even attend church since these things could interfere with their work.
The publicity surrounding the Saipan lawsuits was a public relations disaster for the American clothing companies. By spring of 2000, most of the companies had settled out of court. They agreed to a "Saipan Code of Conduct," holding local labor contractors accountable to strict standards regarding worker overtime pay, job safety, and basic civil rights. The companies also agreed to pay the workers $8 million as compensation for the conditions under which they were forced to work.
In the developing countries of the world today, an estimated 250 million children age 5-14 work all sorts of jobs--from farming to mining. Poor countries often argue that child labor is necessary for their struggling economies and for family survival. But there is also a cost for working children in terms of missed schooling and poor health.
In 1999, the United States and 173 other nations signed a treaty that outlawed the harshest forms of child labor. Among other things, the treaty banned children from jobs that endangered their safety, health, or morals. The treaty, however, did not forbid work that interferes with children getting an education. This was unrealistic, according to poor developing countries that depend on child labor and do not have well-developed public education systems.
The World Trade Organization (WTO) is made up of officials from nations around the world who meet to decide the rules for free trade. Late in 1999, the WTO met in Seattle, Washington, but encountered large, noisy, and sometimes violent protests.
Tens of thousands of protesters including labor leaders, environmentalists, human-rights activists, and many other groups demonstrated against WTO policies. Although incidents of window breaking and clashes with police received much publicity, more important stories were taking place. One story was the coming together of so many different groups protesting problems of globalization. The Seattle protests began to make Americans aware of issues over sweatshops, child labor, and the absence of worker rights in international trade agreements. Another story involved the WTO itself. Divisions exist among member nations. Most industrialized nations favor worker rights in international trade agreements, and most developing nations oppose them.
Should the United States insist on strong and enforceable worker rights in its trade agreements? Most Americans say yes, but developing countries balk at this when worker rights lead to increased labor costs, causing companies to move elsewhere in the world.
For Discussion and Writing
- What does globalization mean?
- Why do developing countries often defend sweatshops and child labor?
- Do you think globalization is a good thing for the United States? Is it a good thing for developing countries? Why or why not?
- Do you think there should be international labor standards? Explain.
For Further Information
Frequently Asked Questions About Sweatshops and Women Workers A factsheet by Feminists Against Sweatshops.
The Virtues of "Sweatshops" An article defending sweatshops.
Globalization & Labor A labor perspective by John J. Sweeney, president of the AFL-CIO.
Globalization Must Include Social Justice for all Workers An interview with Guy Ryder of the International Confederation of Free Trade Unions.
Kick Me, I'm for Free Trade Reason magazine article defending free trade.
A C T I V I T Y
Global Worker Rights
The World Trade Organization (WTO) makes the rules for international trade. Labor unions and other groups argue that worker rights should be part of these rules. Poor developing countries usually reply that such labor rules make it more difficult to attract foreign companies willing to create much-needed jobs. In this activity, the class will decide what global worker rights the WTO should enforce as part of all free-trade agreements.
A. Form five groups. Each group will discuss the pros and cons of one of the proposed international labor rules, make any changes to the rule the group believes necessary, and decide whether the rule should be adopted.
B. Each group should report on the pros and cons of its rule, what changes, if any, the group made to the rule, and explain its recommendation on whether the rule should be adopted. When all groups have made their presentations, the class should vote on each rule.
- Workers should be limited to an eight-hour day and forty-hour work week. Any worker laboring beyond these hours should be paid overtime. No worker should be allowed to work more than 60 hours per week.
- Employers must provide a safe working environment for all workers.
- All workers must be paid a minimum wage, which if paid for a 40-hour week, would provide enough money for basic food and shelter in that nation.
- All workers have the right to join labor unions and negotiate for higher wages.
- Any child under the age of 14 may not work if the job prevents the child from attending school.